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This paper examines how energy efficiency fails in the building industry based on many years of research into the integration of energy efficiency in the construction of buildings and sustainable architecture in Norway. It argues that energy-efficient construction has been seriously restrained by three interrelated problems: (1) deficiencies in public policy to stimulate energy efficiency, (2) limited governmental efforts to regulate the building industry, and (3) a conservative building industry. The paper concludes that innovation and implementation of new, energy-efficient technologies in the building industry requires new policies, better regulations and reformed practices in the industry itself